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Obama's innovation push: Has US really fallen off the cutting edge?

Obama sees a push to innovate as the answer to a stalled economy and falling US status. Critics say staying on the cutting edge is not what ails America.

By Staff writer / February 16, 2011

President Obama held a newly manufactured light as he toured Orion Energy Systems, a power technology company, in Manitowoc, Wis., in January.

Larry Downing/Reuters


It may sound odd to say that the United States has an innovation challenge. After all, America is the nation of Franklin and Edison, space telescopes and smart phones. It was ranked No. 1 in innovation last year among 139 countries by the World Economic Forum.

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"We do big things." That's how President Obama put it recently. But the president had a reason for that innovation pep talk in his State of the Union message, and for making the issue a prominent theme of his budget proposal this week.

He wasn't just pivoting toward the political center. At a time when the US needs millions of new jobs, the nation's competitive edge may be eroding. That's the view of many on the economy's front lines, from business leaders to policy experts to public officials.

In just two years, the US has slipped from first to fourth overall in the Global Competitiveness Index, a ranking by the World Economic Forum. The US can claim top billing in the index's "innovation" component, but other nations are gaining.

"Make no mistake about it: We are in for the fight of our lives," says Robert Ackerman, founder of Allegis Capital, a Silicon Valley venture capital firm. "We are still world-class," but "the only way that we are going to reinvigorate our economy in the United States is through [continued] innovation."

Anxiety about American competitiveness is nothing new, of course. And the mood appears to be one of urgency more than panic. But Mr. Obama's innovation theme in recent weeks is tapping into a deep and genuine concern that America is slipping.

Voices from the crowd

The pace of innovation has slowed during the past generation, argues economist Tyler Cowen in a new e-book called "The Great Stagnation." Picking up the pace, he says, is central to job growth.

Scott Klososky, a business consultant who has headed three start-ups, says he sees the rest of the world "starting to reward the entrepreneurial spirit in ways that it didn't do before." That directly challenges America's core strength. He says the big questions now are: "Can we increase the speed of innovation?" and "Can we stay ahead?"

But if Obama has garnered approval from business groups, that doesn't mean his specific ideas are meeting unqualified support. Many backers of an innovation push would tweak the proposals. And critics caution that an innovation strategy can't substitute for other needed actions.


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